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Some businesses find it necessary to hire a Jacksonville Chapter 11 lawyer to assist with a bankruptcy case. This is to ensure that they can reorganize their business and take the right steps to move forward. Businesses can seek assistance to help them navigate the process and regain their strength.
What Is Chapter 11 Bankruptcy?
Chapter 11 is a type of bankruptcy that allows a business to reorganize itself and continue operating under the United States Bankruptcy Code. It is the most complicated area of bankruptcy law. Companies and individuals can file Chapter 11 for businesses of any size that are facing financial disaster. Our Florida Chapter 11 bankruptcy attorney has extensive knowledge about Chapter 11 restructuring and organization.
Reasons Debtors Prefer Chapter 11 Bankruptcy
There are several reasons that business debtors prefer Chapter 11 to other forms of bankruptcy:
1. Flexibility
Filing for Chapter 11 bankruptcy allows businesses to have the flexibility they need to restructure their business debts. Most chapter 11 cases result in the debtor remaining in control and possession of its assets. The debtor is the “debtor-in-possession”.
2. Complexity
Chapter 11 cases can be very complex. However, for small businesses in debt, the Code provides a simplified, expedited process that will save you time and money. A skilled Jacksonville Chapter 11 lawyer will determine if your business is eligible for the simplified process. This excludes obligations owed by insiders, such as the family members of business owners.
3. Reorganize or Liquidate
A business debtor can use Chapter 11 to liquidate all or a portion of his business. Complex businesses often use Chapter 11 to liquidate all their assets. This flexibility is much better than the stricter Chapter 7 liquidation provisions.
Chapter 11 Reorganization vs Chapter 13 Consumer Reorganization
Any individual or business entity can file for Chapter 11 bankruptcy relief. However, certain exceptions are made for entities specifically listed in the Code. Chapter 13 bankruptcy in Florida, also known as “consumer restructuring” bankruptcy, is only available to debtors who are consumer debtors and not business entities.
Individual debtors can use Chapter 13 to restructure their debts, but the total amount cannot exceed a certain amount. Chapter 11 does not limit the amount of debt.
Chapter 13’s plan of reorganization has a 5-year limit (with some extensions), but Chapter 11 doesn’t have any time limits.
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Initiating a Chapter 11 Case
The Code requires that a debtor file significant papers at the United States Bankruptcy Court in the bankruptcy district where it files its Chapter 11 case to initiate it. The documents must be filed regarding the debtor’s financial and business circumstances. Perjury penalties apply to financial information.
The Early Stages
After filing the bankruptcy petition, the debtor must comply with certain deadlines and provide creditors with notices. The filing of the plan of reorganization must be timely (similar to a business proposal) and that meets the Bankruptcy Code. For example, it must detail how the debtor will pay creditors and restructure their debts.
Automatic Stay
The bankruptcy automatic stay is in effect immediately after filing a bankruptcy case, even if it’s a Chapter 11 case. All creditors should not take any action to collect the debts against the bankruptcy debtor without permission from the bankruptcy court. This allows the debtor to have the time it needs to put together a plan.
Chapter 11 Bankruptcy for Florida Businesses
Chapter 11 is primarily utilized by businesses or corporations that intend to wind down, close, and dissolve. Chapter 11 bankruptcy offers advantages over Chapter 7 bankruptcy, even if your business plans to dissolve. With Chapter 11, you can guide your business through the process and achieve a successful resolution. In Chapter 7 bankruptcy, a trustee immediately takes control of the business. However, in Chapter 11, you retain control if the business is reorganized.
If your business has a solid business model and a steady income, you can reorganize it. Sometimes, a healthy business may experience rapid expansion, causing its debts to outpace its income. Even with a solid income, the business can be forced into insolvency.
By utilizing Chapter 11 bankruptcy, a business with an income stream can reorganize or eliminate the debts that led to its bankruptcy. This can be achieved through a process known as debt classification and cramdown. You can continue to pay secured creditors while eliminating other creditors and unsecured creditors that are causing financial distress.
Debt Classification and Cramdown: Reorganizing Business Debts
Many businesses have secured creditors, who hold collateral security interests that grant them the right to repossess business property in case of non-payment. Secured creditors can include auto loans, mortgages, and equipment loans. Businesses often have liens on essential equipment required for operations. To reorganize a business, it is often necessary to modify secured debt to continue operating. Modifying secured debt can involve reducing it to the value of the collateral and spreading the payment over several years. This process allows the business to retain its assets and pay off the secured debt at a more favorable rate.
A Chapter 11 bankruptcy plan is formulated during the plan confirmation process. The debtor is allowed to present their plan during this process. The duration of exclusivity depends on the type of business. If the business fails to confirm a plan within that time frame, creditors may propose their plans, which may not be in the best interest of the business. It is therefore crucial to choose an attorney who understands the process and can confirm a business plan before creditors begin suggesting their own. Creditors are allowed to vote on the plans, although it is usually possible to anticipate voting patterns to ensure the plan passes the confirmation hearing.
If you are facing difficulties with your business, contact the Jacksonville bankruptcy firm Bruner Wright, P.A. to arrange a reorganization.
Chapter 11 Bankruptcy for Individuals in Florida
Due to the debt limitations outlined in the U.S. Bankruptcy Code, individuals and married couples with substantial debts often find themselves unable to file for Chapter 13 bankruptcy. In such cases, they are required to file for Chapter 11. Real estate investors, developers, and sole proprietors with high levels of debt frequently fall into this category and are obligated to file for Chapter 11. These individuals, often self-employed or holding senior positions, have specific needs when it comes to bankruptcy filings. Jacksonville serves as a prime example. Chapter 11 can provide them with the opportunity to regain control over their finances and careers.
Declaring bankruptcy is never an easy decision. If you possess significant net worth, are self-employed, or hold a senior position, your bankruptcy case may require special consideration. Bruner Wright, P.A., a bankruptcy law firm in Northeast Florida, possesses the expertise to assist clients whose bankruptcies necessitate special attention. Chapter 11 can be tailored to meet your specific requirements, allowing you to retain your assets and achieve financial stability.
Through a Chapter 11 bankruptcy, you can reorganize your debts while maintaining control over your assets. The processes of plan proposal and confirmation can address your unique concerns.
In most cases, you will be required to make a minimum payment to your creditors to receive a discharge and retain the property secured by liens. To determine the payment owed to unsecured creditors, subtract all of your expenses, including taxes, food and clothing costs, housing, medical expenses, and payments for secured debts, from your gross earnings.
These payments can be adjusted to safeguard high-value assets and business assets. With the Chapter 11 plan, you can continue operating your business while modifying your debt structure.
Benefits of Working With an Experienced Florida Chapter 11 Bankruptcy Attorney
A Jacksonville Chapter 11 lawyer who is experienced in Chapter 11 bankruptcy will be able to advise you on what to do if your creditor violates the automatic stop. A creditor who violates this stay can face severe penalties.
An attorney will know the issues that the plan must address in order for the court to approve it. The plan must show the court that creditors will receive at least the same amount as in a liquidation.
A Jacksonville Chapter 11 lawyer will start negotiating with the largest creditors to help develop a plan. The Jacksonville bankruptcy lawyer may begin the process before the bankruptcy petition has been filed. In some cases, this could help to avoid bankruptcy.
At Bruner Wright, We Help Our Clients Use Chapter 11 Bankruptcy to Avoid:
- Closing the doors of their business
- Losing their property to mortgage foreclosure
- Dealing with the IRS in dire situations
- Trade debt
30 Years of Debt Relief for Florida Businesses and Individuals
Chapter 11 bankruptcy can assist individuals and businesses with substantial debts in restructuring their finances. It operates on a larger scale compared to Chapter 13 bankruptcy. Chapter 11 is a complex and technical process that necessitates a considerable amount of expertise. If you would like more information about Chapter 11 and how it may apply to your circumstances, please contact Bruner Wright, P.A. in Jacksonville, Florida.
Get in Touch with an Experienced Florida Chapter 11 Bankruptcy Attorney
Bruner Wright P.A. is a top-rated experienced law firm servicing the Florida Panhandle and the South Georgia area. Our practice has been very successful in helping people discharge their debts and handle both bankruptcy and foreclosure. We offer a personal service that is comprehensive and thorough in all aspects of our industry. We are responsive to the needs of our clients.
Our Florida Chapter 11 bankruptcy attorney can help you navigate financial difficulties. Chapter 11 reorganization might be the best option in some cases. Moreover, Chapter 11 bankruptcy cases are complex and require skilled legal counsel to navigate the complexities.
The law offices of Bruner Wright P.A. will work closely with clients to assess their specific circumstances and determine if Chapter 11 reorganization would be a good option for them. We will serve you in any capacity, no matter what path you choose. Contact us today to schedule a FREE initial consultation!
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Contact us today to schedule a consultation to speak to a bankruptcy attorney about Chapter 11 in Jacksonville.